A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Interest rates left unchanged
The Bank of England’s Monetary Policy Committee decided to leave the repo rate unchanged at 4.75% at its monthly meeting, as had been widely anticipated by market commentators. The consensus view in the financial markets is that rates will be increased by 25 basis points at the November MPC meeting. (Bank of England Press Release)
Political News
Conservatives back the need for new homes
In his speech to the Conservative Party Conference opposition leader David Cameron called for more homes to be built for the next generation: “But the environment isn't the only priority. There are other priorities - and sometimes they compete. Sweeping contradictions under the carpet may make life easy for a while. But it's not substance. So let us confront a tension that this Party feels very deeply. We are the Party of aspiration and opportunity, always have been; always will be.”
“A profound part of that is owning your own home. That dream is something Conservatives instinctively understand. We also understand the importance of conservation. But if we want new homes, they must be built somewhere. Yes they must be built with care for local communities. Yes they must be built in harmony with existing architecture. And yes they must be built in sympathy with the environment. But let us not pretend there is a pain-free solution to this dilemma that satisfies every vested interest…as well as providing all the new homes we need. We must be on the side of the next generation. If we are to be the Party of aspiration, we must be on the side of aspiration. And that means building more houses and flats for young people. It is our social responsibility.” (Mr Cameron's speech in full)
There were calls at fringe meetings at the Conference for planning powers to be devolved to local authorities. At a meeting “If not in my backyard, where should we be building houses?”, Lord Bruce-Lockhart observed that housing supply was not keeping pace with demand. He argued for national house building targets to be turned on their heads and give local authorities the power to raise money from the private sector. This would give people the choice of whether to have new development in their areas, and he insisted that opinion would be responsive if new housing was linked to increased local revenue. He argued that it was wrong for a Government Office in Bristol to set targets for a district in Cornwall.
Oliver Hartwich from the Policy Exchange think-tank supported such claims, highlighting the examples of Switzerland and Germany where there are incentives for local authorities to attract people to the area as this generates more money for better public services, or open up the option to lower local tax.
Simon Wolfson, co-chair of the Economic Competitiveness policy group, stated his group’s desire to reform the planning system through bringing in a ‘presumption to develop.’ This would put the onus on planners to provide reasons why development should not take place, rather than developers providing reasons why it should take place.
At a fringe meeting “Connecting England – The rural contribution” Shadow Minister for Housing Michael Gove said he was acutely aware of the problems faced by first-time buyers in affording to buy a home. The Shadow Minister called for more homes to be built across the South East, warning that the high cost of living was threatening to deny future generations the ability of living and working in the area. Mr Gove also highlighted the need to involve local communities in the planning process and suggested that finance raised at a local level should be spent locally. At another fringe meeting Mr Gove drew attention to the fact that all Conservative Governments had been reforming on housing and he cited the success of the MacMillan administration in increasing both private and public sector housing output.
Several fringe events on the environment also focused on housing and construction issues. Of most interest were statements by a number of front bench spokesmen that John Gummer’s policy group was considering a significant reform of building regulations in key areas such as energy and water efficiency. A proposal which appears under consideration is to concentrate on key performance standards and allow industry flexibility on how to achieve this. (DeHavilland)
Conservatives unveil plans for urban regeneration
Michael Heseletine unveiled details of the Conservatives’ agenda for urban regeneration. Lord Heseltine unveiled a preliminary policy paper revealing the direction of his work to date. The new policies include: “Ending the Government’s ‘scorched Earth’ Pathfinder scheme of destroying northern inner city Victorian terraces, and instead focus on the environmentally-friendly refurbishment. Creating ‘Regeneration Priority Areas’ to provide a more flexible planning regime for urban areas in decline. Handing Regional Development Agency funding directly to local councils. Allowing housing associations and councils to securitising the income from housing benefit to raise private finance to build more affordable homes.”
Lord Heseltine said: “Our cities are one of this country's great resources. No one doubts their historic significance. But they are not just our history. They are our future; living symbols of the enterprise, endeavour, culture and diversity upon which the prosperity of our people depends. A growing strength at local council level gives more Conservatives the responsibility to overcome the frustrations of failed opportunity, to acknowledge and build on whatever good is being done, but search diligently to find better answers, particularly for parts of forgotten Britain where still too often great achievement and diminished aspiration live uncomfortably side by side.” (Portland)
Shared equity scheme launched
Housing and Planning Minister Yvette Cooper announced the launch of a “Open Market HomeBuy” shared equity scheme to be made available to key public sector workers, social tenants or those on a council waiting list and other priority first-time buyers. The scheme has been taken up by four private sector lenders: Nationwide, Yorkshire Building Society, Advantage (owned by Morgan Stanley) and Bank of Scotland. The purchaser will have to fund 75% of the mortgage, with the Government funding 12.5% and the lender likewise. In return both the Government and the lender will be entitled to a share of any increase in value of the property when the home is sold and the loan repaid. The scheme will initially be offered to 10,000 people over the next 18 months, with the aim of helping 20,000 by 2010.
Ms Cooper commented on the scheme: “We want to help more families get a first step on to the housing ladder. If you haven't got family or friends who can help it can be hard to get started. In the long run we need to build more homes to ease the pressure on house prices. But in the meantime this new mortgage deal will help thousands of families into a home of their own.” (DCLG Press Release)
Housing Market
House prices rise in September according to Halifax…
House prices rose by a seasonally adjusted 1.0% in September, according to the Halifax House Price Index. Prices over the third quarter stood 8.0% higher than a year ago, a rate that has eased from 9.4% in the second quarter. The rate of annual growth was consistent across England with a rise between 5.5% and 8.5% in all the regions, the narrowest range since the Index began in 1983. London saw a decline in the annual rate of growth from 10.9% to 8.55, which was described as indicating that “the boost to prices in the capital from this year’s record high City bonuses has diminished”.
Martin Ellis, Chef Economist at Halifax, concluded: “Higher mortgage rates following the Bank of England's rate rise in August and the increase in fixed rates over the past five months are expected to dampen housing demand over the coming months. The recently announced increases in utility bills will also put pressure on householders' finances, further curbing housing demand. As a result, house price inflation is expected to moderate over the remainder of the year.” (September Halifax House Price Index)
… and Hometrack
Asking prices rose by 0.4% in September, to stand 4.3% higher than a year ago, according to website Hometrack. The rise in prices was attributed to a lack of available homes coming onto the market, with “high house prices, fully mortgaged homeowners and relatively high transactions costs, especially in southern England, all acting as a disincentive for households to put their homes on the market.” The demand supply balance is most out of kilter in London and the South East.
Hometrack Director of research Richard Donnell commented: “Prices remain unchanged in large parts of the country with affordability pressures acting as a major constraint on house price growth. Whilst the supply constraints are unlikely to disappear in the very short term, we expect the extent of price rises to continue to slow over the rest of the autumn. This will result in a continued slowdown in the rate of growth with average prices likely to be around 5% higher by the year end.” (Hometrack's September National Housing Survey)
Other News
Equity withdrawal falls back
The amount of money being borrowed against the equity of peoples’ homes fell back slightly in the second quarter, according to the Bank of England. The Bank defines Mortgage Equity Withdrawal (MEW) as “intended to measure that part of secured borrowing that is not invested in the housing market”. MEW totalled £11.3 billion in the second quarter, equating to 5.2% of disposable income, lower than in either of the two preceding quarters. (Q2 MEW Press Release)
HBF Events
Leap in housing applications continues to slow UK supply
Housebuilders are increasingly being forced to apply twice, three times or even more for planning consent on residential schemes - slowing the supply of new homes in the UK at a time when the government is trying to speed the process up. New research shows that the number of schemes needing multiple planning applications to secure consent has doubled in the past two years. Around 33% of schemes now require more than one application before they are given the go-ahead – twice as many as in 2004. Triple applications now account for 8% of schemes, up from just 2.3% in 2002.
The stark figures have been uncovered by research undertaken for the Housing Market Intelligence report, which has revealed that the situation is particularly acute in the South East, where fewer than 55% of applications are given the green light on the first attempt.
The full results of the research appear in the Housing Market Intelligence 2006 report, which will be launched at the fourth annual HMI conference at London’s Business Design Centre on October 10.
Chance to inform the DCLG’s policy direction at Housebuilding 2006
The Department for Communities and Local Government is giving developers the chance to discuss the latest housing and planning policies directly with DCLG representatives at the Housebuilding 2006 exhibition.
The DCLG has extended an open invitation to housebuilders to come onto its stand M37 on October 10 and 11, to find out more about its future policy direction and raise any concerns about current issues.
HBF Technical Conference 2006: Codes and Regs – The Way Forward
9 November 2006 - Nottingham Belfry Hotel, Nottingham
For those not attending Housebuilding 2006, the HBF Technical conference offers the opportunity to catch up on the technical issues of the moment. This parallel conference will be once again looking at the hot topics of the Code for Sustainable Homes and Building Regulations, and will address any further developments since HB06.
Current speakers are included from the following organisations: DCLG, LABC, HBF, Robust Details ltd.
For further information please contact events@hbmedia.co.uk or 020 7960 1646. To register your place on-line visit www.hbmedia.co.uk
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Early 2007
Home Information Packs (HIPs) Revised regulations 14 June
HIPs – 10 to 12 planned trials Autumn 2006
HIPs Introduction 1 June 2007
Consultation on DCLG structure June 2006
Implementation of new DCLG structure September 2006
Housing and planning incentives To 17 October
Planning and Pollution Control Consultation Closes 6 December
Part B of Building Regs – Document Autumn
Implementation April 2007
Water Regulations Consultation Document Autumn
HBF Events
HBF Annual Planning Conference 14 September
Housing Market Intelligence 2006 10 October
Housebuilding 2006
Business Design Centre, London N1 10 &11 October 2006
For a full list of HBF events please visit HBF Events & Meetings
For details of HB Media events click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
Housebuilding 2006
10 and 11 October 2006, Business Design Centre, London N1
Now in its third year the exhibition, housing market intelligence conference, management conference programme, free briefings and the Housebuilding Innovation Awards bring together all that is new in the housebuilding industry.
Visit www.housebuilding2006.com for more information.
Pre-register today to be entered in to a prize draw to win two trips to the Ashes Down Under (match tickets, flights and accommodation)